Put away your bagpipes, kilts, claymores and sgian-dhubs, and leave some of that 15-yr old Glenfiddich for me. This is a different forty-five, namely, viz and to wit, the forty-five days within which IRS is deemed to have processed a tax return, so that the address shown thereon is the “last known address” of the taxpayer for Section 6212(b)(1) purposes.

What’s that, you may ask. And well you should, because it would be a great question for the Special Enrollment Examination.

And the answer is a winner for Marina Murashova, Docket No. 6460-14, filed 4/23/15.

Well, Section 6212(b)(1), though it mandates mailing of a SNOD to the “last known address”, doesn’t define the same. But bless their contrarian hearts, the Ninth Circuit in LaLa Land, has exhaustively delved into the topic.

And the magic answer is “when the return in question, which shows the address upon which IRS can rely (as there is neither a subsequent return nor written notice showing any other address) hits IRS’s computer, thereby allowing the IRS employee who mails the SNOD to check the address thereon.”

So Judge Goeke, punctilious as always, canvasses the caselaw and concludes: “We think the law is well-settled that, prior to Respondent’s regulations, Respondent was held responsible for addresses shown on federal income tax returns that were properly processed, and that processing the return meant that the information on the return was available in Respondent’s computer system.” Order, at pp. 8-9.

What’s this, you may ask, Treasury changed the rules after Ninth Circuit told them what the rules are?

Surprise, surprise. Treasury did, and here it backfires.

Reg. 301.6212-2(a) has the famous “last filed return unless clear notice given” language. But wait, there’s more! There are two Rev. Procs., Rev. Proc. 90-18 (1990-1 CB 491) and its successor, Rev. Proc. 2001-18, 2001 1 CB 708.

Note well that these were superseded in turn by Rev. Proc. 2010-16, IRB 2010-26, but this plays no part, as the year involved here predated the last revision.

Not only must the return have been “filed”, that is, in IRS’s hot little paws, it must have been “properly processed”, per the aforesaid Rev. Procs.

Judge Goeke:  “However, the Rev. Procs. both go further and provide in section 5.02(1) that, except as otherwise provided, a return will be considered properly processed after a 45-day processing period, which begins the day after the date of receipt of the return by the Internal Revenue Service Center.” Order, at p. 10.

So the return must have been properly processed, except if it wasn’t, it is deemed properly processed forty-five days after the return is filed.

And that’s Marina’s story.

Her return was in fact processed within the forty-five day time frame, but IRS mailed the SNOD before the forty-five days was up. And IRS mailed it to what was the old address, not Marina’s then-current address.

IRS claims that the forty-five days was a safe harbor for them, and if they mailed a SNOD before the forty-five days were up, their agent need not check to see if a filed return or notice had hit the computer sooner. But IRS’s attorney had no evidence to show what IRS did or didn’t do, or what was SOP.

Judge Goeke isn’t buying.

“We would have to presume that it was reasonable for them [IRS] not to look at the most recent information before sending out the notice, because it was simply something that had been done previously, when the notice was actually drafted. As I said, however, there is no specific evidence in the record about those circumstances or the normal procedures Respondent would have from the time a notice is reviewed and prepared until it is sent out. We will not presume that it was reasonable for the employees who sent the notice to Petitioner not to have accessed the computer records on… the day before the notice was issued, to determine the address that was available to them, which was not the address shown on the notice of deficiency.

“This creates the unusual circumstance where Respondent’s efficiency in processing the return served to Respondent’s detriment. However, we think the best course, based upon the limited record we have about the processing of Petitioner’s notice of deficiency, is to follow the case law that existed.” Order, at p. 12.

So, IRS, too soon may arrive as tardy as too late.

“The fact that the Revenue Procedure goes on to set a black line 45-day rule for that date does not, in our opinion, create a safe haven for Respondent when Respondent actually has the information available before 45 days.” Order, at p. 13.

Thus, no SNOD (because not mailed to last known address), so no jurisdiction. And Marina’s late petition doesn’t hurt her.

Takeaway–This case relies on pre-2010 law, regs and rev. procs. Beware! Current rev. procs., as well as your mileage, may (and will) vary.